Selling a Small Online Business in the US or UK: Who Buys and How the Deal Is Paid

Who is selling, and why it matters now

Start with who is likely to sell. In the Census Bureau’s latest Annual Business Survey (the 2024 survey, reference year 2023), 1,187,220 of the 4,208,231 owners of employer firms who reported an age were 55 to 64 (28.2%), and 970,618 were 65 or older (23.1%). Together that is about 51%, a figure we added up ourselves. The Bureau’s 2019 survey chart reached almost the same conclusion for data year 2018: 51% of owners of employer businesses were 55 or older.

Two caveats. The table covers employer firms in all sectors, so it says nothing directly about one-person sites and apps; read it as a sign of how many owners are nearing a decision, not a count of online businesses for sale. We also found no comparable official UK owner-age figure that we would stand behind, so we quote none.

The Spanish-language version of the same problem, where a profitable digital business has no obvious exit route at all, is in the digital succession problem. The owner’s question is the same here: who can take this over, and how do they pay for it?

The three parts of a small-business deal

Small deals are often paid in layers, and each layer carries a different risk for you:

• Cash at closing: the only part you control the moment the deal completes.
• A seller note: you are paid the remainder in installments with interest, so you become a lender to the new owner and carry the risk that the business underperforms after you leave.
• Contingent payments (an earn-out): part of the price depends on performance after closing, which aligns incentives and invites disputes over how profit is measured.

Whether each layer is allowed, and how it is taxed, depends on two things you do not set: what the buyer’s lender requires, and what your tax authority does with deferred payments. Both differ between the US and the UK.

US: what SBA 7(a) does to a seller note

Many US buyers of small businesses finance the purchase with an SBA 7(a) loan, which is made by a bank or other lender. The SBA’s rulebook for lenders, Standard Operating Procedure 50 10, is now in version 8.1, published September 25, 2026 and effective October 1, 2026, replacing version 8. If your buyer is using one, these are the points in its change-of-ownership appendix that decide what your note can look like:

• A seller note can count as the buyer’s equity, but only on full standby. Seller debt that is subordinated to the lender and on full standby, with no payments of principal or interest for the term of the 7(a) loan, may be considered as equity. It may accrue interest, payable after the 7(a) loan is repaid in full. The lender uses SBA Form 155 or its own equivalent, and the standby creditor may take no action against the borrower or collateral without the lender’s consent.
• A note that pays from day one is tested against cash flow. The total debt supporting a change of ownership, including seller debt that is not on full standby, is limited to the business valuation and must be supported by debt service coverage, which for an initial acquisition is a minimum ratio of 1.25:1.
• Earn-outs are out. The SOP prohibits seller earnouts, though it allows buyer rebates based on business performance.
• You cannot stay on as an employee. In an initial acquisition the seller may not remain as an officer, director, stockholder or employee; a consulting contract for a transition is allowed for no more than 24 months in total.
• The price has to match a valuation. A qualified source values the business, and any price above that valuation must be covered by equity. The appendix does allow a 7(a) loan to finance intangible assets such as goodwill, customer lists and intellectual property, provided the due diligence requirements are met.

In short, if an SBA-backed buyer wants your note to count as equity, you may wait for payment until the bank is repaid, and you cannot add an earn-out. These are lender rules, not law, and they change between SOP versions. Ask the buyer early which lender and program they are using.

US: installment sales and Form 8594

On the tax side, a seller note can be reported under the installment method. IRS Publication 537 defines an installment sale as a sale where you receive at least one payment after the tax year of the sale, and says that with such a sale you may be able to report part of your gain as each payment is received. If you would rather not, you can elect not to use the method and report the entire gain in the year of sale, even though you have not been paid in full.

The same publication lists limits to check before relying on it:

• Depreciation recapture income is reported in the year of sale, whether or not you received a payment that year.
• The installment method does not apply to inventory sales.
• If the contract does not provide enough stated interest, there may be unstated interest or original issue discount, so a zero-interest seller note is not free of tax consequences.
• Selling a whole business for one price is not the sale of a single asset: the price is allocated across asset classes.

That last point brings in Form 8594. The IRS treats the sale of a business as a sale of each individual asset rather than of a single asset, each with its own tax character, and requires the residual method to allocate the price. Under the Form 8594 instructions, both purchaser and seller generally must file the form when the assets transferred make up a trade or business. Assets fall into seven classes, from cash (Class I) through goodwill and going concern value (Class VII), and both parties must report consistently with their own tax positions.

For a seller, the split of the price between equipment, software, customer relationships and goodwill changes the character of your gain, and buyer and seller often prefer different splits. Agree the allocation before closing and have your accountant run it both ways.

UK: Business Asset Disposal Relief and deferred payment

The UK tax question is different, and it starts with the relief. Under Business Asset Disposal Relief (BADR), GOV.UK says you pay Capital Gains Tax of 18% on all gains on qualifying assets disposed of from April 6, 2026, against 14% for disposals between April 6, 2025 and April 5, 2026 and 10% on or before April 5, 2025. To claim when selling a business, you must be a sole trader or business partner who has owned the business for at least two years. If you are selling shares, you must be an employee or office holder of a mainly trading company for at least two years, and there are further tests on the size of your holding.

There is a cap. HMRC’s helpsheet HS275 (2026) gives a lifetime limit of £1 million of qualifying gains for disposals on or after March 11, 2020, and qualifying gains above it are taxed at the normal rate. Relief is not available to companies. Gains that do not qualify are taxed, for the 2026 to 2027 year, at 18% within the basic rate band and 24% above it, with an annual tax-free allowance of £3,000. The gap between 18% and 24% is why structure is worth an accountant’s time before you sign.

Now the deferred payment. HMRC’s Capital Gains Manual separates two cases. Where the amounts of the future payments are known at the date of disposal, they are ascertainable, and the full amount is included in the disposal proceeds, with no tax consequences when the future amounts are received. Its own example is £100,000 on completion and £200,000 in four annual installments of £50,000. On that reading, a fixed seller note can bring the whole gain into the year of sale, before you have been paid in full. That is the opposite of the US installment method, and a surprise for any seller who assumes tax follows cash.

Where the amount depends on events after the sale, such as a profit-based earn-out, the consideration is unascertainable. The manual says you receive the right to future payments, which is itself the consideration, valued at the time of disposal, and that payment of tax by instalments is not appropriate in this case. There is some protection if a buyer defaults: the manual notes that a claim can be made where part of the consideration counted subsequently proves to be permanently irrecoverable. We have not covered whether the tax on a fixed deferred sum can itself be paid in installments; ask your accountant, because it changes how much cash a seller note leaves you with.

UK: Companies House and who owns the company

If the business sits in a limited company and you sell the shares, the public record has to change. A person with significant control is usually anyone who holds more than 25% of the shares or voting rights, or can appoint or remove a majority of the directors, and the company must tell Companies House about any change to its PSC information within 14 days of confirming the change. A buyer who takes the whole company will therefore replace you on the register, and the filing date is a real deadline in the completion checklist.

Selling assets out of the company instead of the shares changes who is taxed and whether BADR is available, since the relief is not available to companies. We do not go through that route here; put it to a UK accountant first.

US and UK side by side

Where a cell says “not covered”, it means we did not verify a rule in a primary source, not that none exists.

What the buyer sees in due diligence

Whatever the structure, a buyer and any lender will test three things you can improve before you list, as covered in how we value a micro-SaaS or media asset.

1. Verifiable revenue. An SBA lender has to check the seller’s reported figures against IRS tax transcripts. Where a Quality of Earnings report is required (Initial Acquisition and Business Expansion deals at $3 million or more), it includes a cash proof that reconciles bank statements to the income statement and tax return for the trailing twelve months and the last two fiscal years. Expect any serious buyer to ask you to tie processor and bank records to your books.
2. Dependence on you. The same report reviews owner-compensation add-backs and assesses customer concentration and whether revenue and margins will hold after the sale. If your name is on the support inbox and the accounts, the price is less certain.
3. A clean handover. Who controls the domain, payment processor, repositories and ad accounts on closing day, and how long you will help afterwards. Security exposure gets checked here too; see cybersecurity due diligence for small acquisitions. If the business lives on search traffic, expect a buyer to ask whether AI engines can read and cite it too — a GEO website audit before you list answers that on your terms.

How ThinkTier buys

We are a buyer, so weigh this section accordingly. Our Investment & Acquisition practice buys small digital businesses and pays for them out of the cash flow the asset already produces, through deferred payments or an earn-out rather than a full payment at closing. That suits an owner who wants out of the operating work and does not need all the money on day one. It does not suit every seller: as above, a deferred payment can be taxed before the cash arrives, depending on where you are. We do not quote prices or multiples in articles and we do not give tax advice; we can explain the structure we would propose so you can put it in front of your own advisers. Our Spanish-language work is covered in micro private equity for Spanish-speaking markets.

Before you sign anything

This article is general information drawn from published government and regulator guidance as of October 1, 2026. It is not legal, tax or financial advice and does not take your facts into account. You need a lawyer and an accountant licensed in your own jurisdiction before you agree terms.

Five questions to take to them:

1. Is this an asset sale or a sale of the company, and how is the price allocated across the assets?
2. What is the buyer’s financing, and does the lender require my note to be on standby or subordinated?
3. When is the tax due on the deferred part of the price, and can I afford that bill from the cash I receive at closing?
4. If the buyer stops paying, what security do I hold, and what relief is available for an unrecoverable payment?
5. What do I have to file, with whom, and by which date after completion?